"What's The Rush?"

Mika Brzezinski of the entertainment network MSNBC just asked that question about the economic stimulus plan. These people live in another world. The Beltway "bipartisan" BSers do not get it. At all. Apparently, Paul Krugman was on Morning Joe today. I did not see it so I do not know if he told them:

It’s hard to exaggerate how much economic trouble we’re in. The crisis began with housing, but the implosion of the Bush-era housing bubble has set economic dominoes falling not just in the United States, but around the world. . . . [M]ost economic forecasts warn that in the absence of government action we’re headed for a deep, prolonged slump. . . . The Congressional Budget Office . . . recently warned that “absent a change in fiscal policy ... the shortfall in the nation’s output relative to potential levels will be the largest — in duration and depth — since the Depression of the 1930s.”

(Emphasis supplied.) There is no time for vacuous ignorant Beltway fiddling. The nation's economy is melting. That's the rush Mika.

and he was excellent. I know he has a real "day job" but I wish he would be a regular participant on this show. He busted every myth about the current state of play that Joe & Co have been pushing in the last couple of weeks. If you get a chance to see a replay, I highly recommend it.

The global economy is over debted. Progressive leaers, conservative leaders did the same thing. They rode an economic bubble to huge debt levels (liberals through social welfare spending, republicans through war and tax cuts) but the net result is the same.

The world has too much outstanding debt and incurring more won't save anything.

I would prefer Obama to do an FDR routine and combine bold action with the sort of "we have nothing to fear but fear itself" routine that inspires confidence.

But FDR had the luxury of a bipartisan political consensus for bold action. Most of his early proposals, far more ambitious than anything we would consider today, passed by acclamation. Obama, on the other hand, is bitterly opposed by the sort of people who think getting rid of the estate tax would stimulate the economy. So he has to be honest about the state of the economy in order to muster the political will for action. No one forced FDR to overcome the idiotic objection that inaction would be the best solution of all.

I think the Great Depression also teaches us that when you have a deep economic problem, expressions of confidence from the President can only do so much! So I'm more worried about the action side of the equation than the rhetorical side.

In the long run, the concern is legitimate. In the short term, we are still the best game in town, believe it or not.

The world economy is very interdependent. China needs a strong US economy because the American people buy up all that crap they manufacture. If we need a big loan in order to restart our economy, they really can't afford to say no.

His theory is based on the fact that somehow GW and the US economy hasn't been spending enough money recently and nothing could be farther from the truth. They haven't been on liberal causes (at least not all of them) but the fact remains we've run up huge deficits, borrowed money we don't have and that is why we are in this mess.

We've dug way to deep of a whole in debt and Krugman's theory to put it simply is we need to keep digging until we get to the other side and we aren't digging deep enough or fast enough.

The market is reacting to over government action (deficit spending, too many cuts, overspending, encouragement to take on bad debt, Fannie and Freddie) and is reacting.

The world is out of money. There is less demand then the infastructure in place to produce product. Go back to Econ 101. No demand no more need for supply.

The choice is let the painful retraction happen, help those hurt the most and get through this. The Keynesian solution is to print and borrow money that we don't have. Where is that money going to come from? The CBO is now saying it would actually hurt us in the long run.

So we hurt our economy in the long turn to do what? Not create jobs in the short term?

Just becasue something is bad and terrible doesn't mean you ahve to do something. We need to do nothing and adapt to the economic environment we've created for ourselves. It will suck, people will be hurt but we will get through it to the other side. Then we will invent something, discover something or create something that will get it moving again.

This stimulus and more goverment action (because this won't work) will simply put of the pain and as anyone upside down on their credit card debt will tell you that will result in bigger pain down the road.

Keynesian phylosophy believes that government economic thoery is somehow diferent then the same priciples that apply to us. Because the big economy is so complex and so different it can take actions (stimulus, spending) to creat economic activity that will pump more money and demand into the economy.

This doesn't pass the smell test. We can't make money out of thin air. If we do we are either borrowing it from someone that already has it or we are printing it which doesn't create more wealth it simply devalues the money already in circulation.